How to make a family business succession plan?
How to make a family business succession plan?
You would not be surprised to find that transferring a family business to the next generation can be quite challenging. If not well managed the transition can go wrong and compromise the future of the company and particularly the enterprise. Such a plan must be well understood and implemented to avoid any confusion or mismanagement when the change of ownership and leadership of the business is to take place. Here are some tips for making a family business succession plan:
Choose a successor
This will involve finding out those with the interest and capabilities for charting the course of the company into the future. Take into consideration their experience in work, their education, financial background, vision, passion, and compatibility with the workers. Explain a grooming process that you would use in order to nurture the skills in your employees.
Set a timeline
Establish a clear, practical plan of when the leadership and ownership will occur so that practicality is not compromised. This means setting a target age and deciding on milestones the successor has to achieve. It is also crucial to establish whether the transition is a one-time process or gradual. Never leave the team members in the dark as far as progress is concerned; ensure there are proper communication lines to follow regarding the same.
The following recommendation pertains to defining new roles and responsibilities:
Explain how much ownership each family member will possess and what roles others with a blood relation to the families involved will have post transition. It is also important to clarify how people’s roles may be affected if they are to add, subtract, or modify a process. Set guidelines for a family employment to be implemented in future to avoid such incidences.
Seek input from others
Consult with business consultants, your accountant, your lawyer, and bank officials in order to do everything right. Know if a third-party family business consultant can mediate and help in planning with everyone. Also, pay attention to what the employees are saying about the succession plan and other issues that affect the company.
Communicate the plan
There should be clear communication on the succession plan, and some of the factors that may influence the timing to the family, the management, and employees. Less ambiguity and hierarchical power struggle are witnessed when there is good communication. Schedule a weekly and /or monthly family meeting to explain the family’s status, roles etc.
Formalize the plan
Document the succession plan as it should be recorded in all legal, financial and organizational executory papers. Hire specialists as needed. Regarding the first contingency plan, if the initial successor departs, outline the contingency plans as follows:
Review and adapt
Make it a culture to routinely refer to the succession plan to make sure that the timelines are correct in addition to the aspects that require changes. Always stand ready to change the plan due to some circumstances or the change in people’s goals or objectives. Have positive and clear communication with other team members.